Benchmarking Services Branding

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Journal of Marketing Management, 2006, 22, 717-758

ISSN1472-1376/2006/7-8/00717 +41 ©Westburn Publishers Ltd.

Brendan J. Gray1 Benchmarking Services BrandingPractices

University of Otago

The results of research into the competitiveness of NewZealand firms that provide professional and other

business services suggest that effective branding is akey source of success. Brand strength appears to belinked to four main practices: investing in marketingcommunications to improve customer awareness andunderstanding of corporate and product brand values;contributing to the wider community to improvecorporate reputation; improving internalcommunications (internal marketing) so front-line and professional staff are kept better informed aboutcustomer needs, market changes and companyinitiatives, thereby enabling staff to help customers

better; and improving service quality to improvemarket positioning. The paper answers calls for thedevelopment of an integrated theory of servicesbranding and concludes by positing three mainconditions for effective services strategies and practices.

Introduction

The services sector accounts for up to three-quarters of the GDP of developedeconomies, yet there has been relatively little research into identifying bestpractices in services branding (de Chernatony and Dall’Olmo Riley 1999).This lack of benchmarking data is surprising, given that branding appears tobe a cornerstone of successful services marketing (Berry 2000). The results ofthe few empirical investigations of services branding practices are somewhatequivocal. While the majority of authors conclude that branding thecompany (or corporate branding) is more appropriate than brandingindividual service products (e.g. Balmer 1995; Berry 2000; de Chernatony andDall’Olmo Riley 1999; de Chernatony and Dall’Olmo Riley 2000), others takea contrary view (e.g. Onkvisit and Shaw 1989).

A leading American services marketing researcher has produced a model

1 Correspondence: Brendan J. Gray, Professor of Marketing, School of Business, University

of Otago, PO Box 56, Dunedin, New Zealand, Tel: +643 479 8733, Fax: 643 479 8172, E-

mail: [email protected]


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of brand equity formation based on interviews with 14 mature, high-performing service providers in the USA (Berry 2000). The author thenidentifies four generic strategies to cultivate brand equity: dare to bedifferent; determine your own fame; make emotional connections; andinternalize the brand. Although the last point emphasises the important role

that staff play in services branding, these rather jingoistic terms appear to bebased more on anecdotal than empirical evidence, and could be as applicableto the producers of tangible goods as to the providers of intangible services.

Prominent branding researchers in the UK have argued that the fastmoving consumer goods approach to branding needs to be adjusted for theservices sector, and that more research is required to produce a tailoredmodel of services branding (McDonald, de Chernatony and Harris 2001). Thecurrent study takes a small step towards answering the call by McDonald etal. by benchmarking the branding practices of successful professional andbusiness services providers in New Zealand. Implications for servicesbranding theory and practice are discussed.

Literature Review

The main theories and concepts that underpin this study are the resource-based view of the firm (Wernerfelt 1984; Barney 1991; Fahy & Smithee 1999),the sources-position-performance model of sustainable competitiveadvantage (Day and Wensley 1988), and customer-based brand equity(Aaker 1992a, 1992b and 1996; Keller 1993).

From a resource-based view, the capabilities that set service firms apartfrom their competitors are based on intangible business processes, ratherthan capital equipment. Intangible assets such as customer relationships,industry relationships and unique competencies (Eriksson, Majkgard andSharma 1999), and brands with favourable, unique and strong associations(Keller 1993), are likely predictors of service quality. A market-orientatedculture (Narver and Slater 1990) and related market information andcustomer management practices (Jaworski and Kohli 1993) should enablefirms to utilise resources more effectively in the face of changing marketconditions, competitor actions and customer needs. Competitive positioningof brands to account for customer needs and competitor actions should resultfrom this.

Although intangible business processes and assets may be difficult toimitate, and may be highly contextual, benchmarking the marketing practicesof successful firms can still offer insights to researchers and managers into

ways of improving firm performance. Branding is a case in point.Effective marketing requires the development of effective images, and it

could be argued that the intangible nature of services makes branding more


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Benchmarking Services Branding Practices 719

critical for the success of service firms than for product firms (Onkvisit andShaw 1989). Brands are names, symbols or designs used by customers toidentify the providers of goods or services (Aaker 1992a and 1992b). Brandscreate value for both consumers and brand owners. According to Aaker(1996), the value of brands, or their equity, is based on brand name

awareness, brand loyalty, perceived quality and brand associations. Theseassociations are largely aesthetic and experiential, and express a set of valuesthat position the brand as unique and valuable (Salzer-Morling andStrannergard (2004). However, there are disagreements in the literature overhow to measure brand performance. It has been posited, though, that successis a multidimensional construct where business-based and consumer-basedcriteria are interrelated and cannot be considered in isolation (McDonald, deChernatony and Harris 1998).

This leads to the following propositions:

P1: More highly market-oriented service firms are likely to invest more

resources in branding than less market-oriented firms.

P2: Service firms that invest more resources in branding (i.e. brand-oriented firms) are likely to outperform those that invest fewer resources inbranding over a wide range of performance measures.

The generic features of services, particularly their intangibility,inseparability, heterogeneity and perishability (Lovelock 1983), raisebranding challenges. Corporate (as opposed to service product) brandingappears to be better suited for intangible and complex offerings, such asprofessional and financial services, because this emphasises the capabilitiesof the provider, enhances consumer trust and acts as a basis of differentiation(Dall’Olmo Riley and de Chernatony 2000; McDonald and de Chernatony2001). Services staff play important roles in facilitating the brand experiences,perceptions and relationships that customers may have with the firm. As aresult, training and communication are needed so that both employees andcustomers know what the brand stands for, while a “consumer delightingculture” helps to motivate employees to live the brand (de Chernatony andDall’Olmo Riley 1999, p181).

This leads to the following propositions:

P3: Brand-oriented service firms are likely to invest more resources in personnel skills training.

P4: Brand-oriented service firms are likely to have higher customer skillslevels.


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These propositions only address the likely outcomes and characteristics ofbrand-oriented service firms. The actual branding practices of high-performing firms are less well understood. An earlier review of the servicesbranding literature suggests that although the marketing practices ofbusiness to business service providers may have lagged behind the norm for

goods, the marketing of consumer services appears to be as advanced as fortangible products, with the complexity and intangibility of services wellunderstood by marketers and accommodated in their positioning anddelivery strategies (Dibb & Simkin 1993). However, this conclusion appearsto be largely based on the observation that prominent consumer servicesfirms often use catchy slogans to promote their organisations and/or serviceproducts, and ignores the underlying strategies and practices that may guidethese communications.

A recent study in the USA, based on interviews with 250 executives andstaff in 14 high performing service firms (Berry 2000), and an oft-quoted UKstudy, based on interviews with 20 “brand experts” (de Chernatony and

Dall’Olmo Riley 1998a, 1998b, 1999) have tried to address this knowledgegap. Although these later studies provide insights into how traditionalproduct branding approaches can be adapted to account for the particularnature of services and to improve service brand equity, the drivers behindthe generic strategies suggested by these studies are less well understood.This indicates that further research is needed, particularly in market contextsoutside the USA and UK, to investigate best practices in services branding.This benchmarking data could then be used to help develop a moregeneralisable, integrated theory of services branding.

Although the extant literature tends to emphasise the use of corporate-level (rather than product-level) branding in many services, the relationshipbetween corporate branding and a related concept, corporate reputation, hasnot been adequately researched in the either the goods or service firmcontexts. Bickerton (2000) posits that corporate reputation and corporatebranding are closely linked, and that the brand incorporates reputation,product/service performance, the portfolios of products offered andcustomers served, and the organization’s networks. He argues that thestarting point for corporate branding should be customer value (a bottom-upstrategic marketing approach), although this also needs to be guided by anappropriate vision and strategy (a top-down approach).

Numerous benefits may accrue from a strong and positive corporatebrand. According to Gregory and Wiechmann (1998) corporate advertisingcan be used to build public awareness and a favourable position, to pre-sellto target markets, to assist in managing crisis situations, and to attract andretain good employees. There is some evidence that corporate image orreputation may also influence customer intentions to buy services (Yoon,


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Guffey and Kijewski 1993). However, the relationship between corporatebranding and reputation is still confused, and further research is needed toclarify the particular roles that each plays in improving customer and otherstakeholder relationships.

This leads to a major research question, to be addressed in the qualitative

phase of the present study:

Q1: What practices do top-performing service firms use to manage their brandsand/or corporate reputations?

The benchmarking evidence from New Zealand, a small, open economy,could then be contrasted with evidence of best practices from largereconomies such as the USA and UK to help develop a more generalisabletheory of services branding and corporate reputation management.

Research Design

Strategic marketing management research has tended to focus on firms thatproduce goods rather than services. Therefore, there is a need for furtherclarification of the degree to which theories developed in the goods sectorcan be applied to the services sector and vice-versa. For example, the modelof sustainable competitive advantage (Day and Wensley 1988) that guidedthis project was first adapted for services by Bharadwaj, Varadarajan andFahy (1993), but not tested empirically in the business services sector beforethe present study. After preliminary testing, the model was adapted furtherto guide the current research (see Figure 1).

Figure 1. Services Competitiveness Research Model

Sources ofAdvantage- market

orientation- branding- innovation- info tech- resources

- service skills

PositionalAdvantages-differentiation-costeffectiveness

Performance- satisfaction- loyalty- revenue- profitability- brand equity- reputation- innovation

success

Reinvestment in Resources & Skills

Environment


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The first stage of the current study involved developing a surveyquestionnaire to measure the strength of the relationships between particularfirm and market characteristics and superior performance in service firms.Likely predictors of superior performance and competitiveness werededuced from a review of previous studies of company performance and

competitiveness.The questionnaire was operationalised through the use of scales adapted

from empirical studies that informed the various parts of the research model.For example, scales that measure sources of competitive advantage werederived from studies that investigated:

• The adoption of market-oriented business practices (Gray et al. 1998);

• The development of effective and efficient service innovationprocesses (de Brentani 1991, 1995);

• Investment in services branding and corporate reputation (Aaker1991, Keller 1993, Gregory and Wiechmann 1998);

•

Use of Web-based marketing (Adam and Deans 2001); and• Reinvesting profits in resources and skills to sustain sources of

advantage (Day and Wensley 1988).

Investment in these sources of competitive advantage should lead topositional advantages in the marketplace (Day and Wensley 1988). Singleitem scales were deduced from the Day and Wensley study to assess howwell firms had achieved the following advantages (in comparison to theirnearest competitor):

• Differentiated service products or service delivery methods based on

superior quality or innovative features; and/or• Cost advantages based on more efficient service production and

delivery methods.

In turn, it can be posited that competitive market positioning should lead toperformance advantages. Performance was measured using a range ofcommonly-used, single-item, subjective, relative measures (i.e. how wellfirms perform compared to their nearest competitor on a variety of criteria).Performance outcomes include:

• Sales revenues and profitability;

•

Customer satisfaction and loyalty; and• Brand equity and corporate reputation.

It is worth noting that the market environment can have both a direct effect


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on performance, and also moderate the relationships between sources ofadvantage, positional advantages and organisational performance (Gray etal. 1999). The main environmental influences on performance are likely to be:

• Market turbulence (changing customer needs and preferences);

•

Technological turbulence (technological obsolescence, developments,barriers and opportunities);

• Competitive intensity;

• Market growth; and

• Barriers to market entry.

Market and technological turbulence were measured using multi-item scalesand the remaining three environmental influences measured using single-item scales derived from the Gray et al. (1999) study.

Validity and reliability checks using exploratory factor analysis and theCronbach’s alpha test indicated that the multi-item scales utilised in the

study were reliable and valid.

Survey Sample Frame

This paper discusses the results of the first and second phases of a five-stagestudy supported by the Public Good Science & Technology Fund toinvestigate ways of improving the competitiveness of New Zealand servicebusinesses. The first phase involved a comprehensive survey of serviceproviders to identify key sources of competitive advantage (see Figure 1).The second phase involved in-depth interviews with owners or seniorexecutives of 37 top-performing firms and 10 lower performers to identify

examples of best practice in various business management areas, includingbranding and corporate reputation.For the purposes of this paper, analysis and discussion will be limited to

branding and associated corporate reputation and customer service activities,as these were identified in both the survey and follow-up interviews as keysources of competitive advantage.

The bulk of the sample frame for the first, quantitative phase of the studyconsisted of senior managers on the Marketing Performance Centre (MPC)database. At the time of the study, the MPC, based at the University ofOtago, had a regularly updated database of more than 3,000 senior managersin New Zealand companies who were willing to participate in marketingresearch. Approximately half of the database consisted of managers whoworked for service enterprises, and these service sector managers formed thebulk of the sampling frame. An additional 500 service firms were sourcedfrom the Kompass Business Directory, resulting in a total of 2034


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questionnaires being posted.Respondents received a personalised cover letter, the survey

questionnaire and a reply-paid envelope. A username and password wasalso supplied to enable respondents to complete the survey on-line ifpreferred. A free copy of the resultant research report was offered as an

incentive.A reminder letter was sent to non-respondents two weeks after the initial

mailing. Questionnaires received after this date were classified as secondwave respondents. Response bias was checked through analysis of the meanresponses of early versus late wave respondents (Armstrong and Overton1977), as well as a fax survey to 100 non respondents encompassing a onepage selection of questions from the survey. The analysis found nosignificant differences between earlier and later groups or betweenrespondents and non-respondents. The main reason for not responding waslack of time.

Survey Results

A total of 82 questionnaires were returned unopened, mainly becausemanagers had moved, leaving 398 usable questionnaires (a response rate of20.3%). Initial examination of completed surveys identified a group of 43respondents whose organisations were predominately involved inmanufacturing and these responses were removed from the analysis (leaving355 questionnaires for further analysis).

A wide range of service sectors were represented in this survey (see Table1), with the largest groups being property, business and consulting services(14%), transport and storage (13%), finance and insurance (12%), building,mechanical and other trade services (8%). The types of markets served bythese organisations were predominantly business-to-business (46%) orconsumer (39%) markets.

The majority of organisations (55%) were small, employing fewer than 50employees, with 35% employing fewer than 10 staff. More than 44% earnedpretax profits of less than half a million dollars in the previous year. A widevariety of ownership types were represented, with the largest group by far(47%) being New Zealand controlled private companies. This may also reflectthe small size of the majority of firms in the sample.

The respondents were usually the most senior marketing decision-makersin their organisations. Most carried the titles of Marketing Manager or CEO.The average time respondents had been in their current management

position was just under 8 years, with the average time spent in theorganisation nearly 11 years (see Table 2). Those in marketing positions hadnearly 10 years’ experience on average. This suggests that most respondents


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had significant management experience and could be expected to have fairlygood knowledge of their organisations’ marketing and other businessactivities. Respondents tended to be between 41 and 50 years old (36%), and80% were male.

Table 1. Organisation Demographics

Which of the following best describes your service sector? N %Agriculture, mining, quarrying, manufacturing services 22 6.20Electricity, gas, water supply services 6 1.69Building, mechanical trade services 30 8.45Wholesale 21 5.92Retail 8 2.25Cafes, restaurants 2 0.56Tourism, accommodation 10 2.82

Transport, storage 47 13.24Communication services 22 6.20Finance, insurance 43 12.11Property, business services (including consulting) 50 14.08Government administration, defence 3 0.85Education 15 4.23Health, community services 5 1.41Cultural, recreation services 3 0.85Personal services 9 2.54Other service activities 46 12.96No response 13 3.66

TOTAL 355 100.00 Customer type

Consumer 138 38.87Business to business 163 45.92Government 10 2.82Other 11 3.10No main customer type 16 4.51No response 17 4.79

TOTAL 355 100.00


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Table 2. Manager Demographics

Years spent in organisation and position Mean N

Your current management position 7.76 331Marketing (if applicable) 9.95 188

This organisation/firm 10.73 302 Age of respondent % N

under 30 9.01 3231 - 40 23.66 8441 - 50 36.06 12851 - 60 24.23 8661 and older 2.82 10No response 4.23 15

100.00 355Sex of respondent % NMale 80.28 285

Female 16.62 59No response 3.10 11

100.00 355

Exploratory factor analysis and Cronbach’s alpha tests of the multi-itemperformance, market orientation, investment in branding and corporatereputation, new service development and web marketing scales (see Table 4)indicated that their component items could be incorporated into variablesthat represent overall scores for each of these dimensions. These globalmeasures were then used as inputs for subsequent correlation analysis (seeTable 3) to test the relationships posited in the research model, including the

links between market orientation and investment in branding and the linksbetween brand orientation and performance.The results indicate fairly strong relationships between the degree of

market orientation and level of investment in branding and corporatereputation, and between investment in branding and overall organisationalperformance. This provides some support for Propositions 1 and 2. In otherwords, those organisations which get closer to their customers and reactmore effectively to market changes and competitor actions are much morelikely to build strong and successful service brands. Interestingly, thesignificant correlations between market orientation, investment in brandingand the adoption of more formalised new service development (NSD)

management practices suggests that market-oriented and brand-orientedfirms may also be more innovative.The correlation analysis also indicates a fairly strong relationship between

investment in branding, investment in skills training and the actual skills


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levels of service personnel, offering some support for Propositions 3 and 4(see Table 3). This implies there may be a link between the quality of staffand the quality of the brand. The strong relationship between organisationalperformance, investment in skills and actual service skills levels also suggestsa recursive relationship: i.e. better-performing firms tend to reinvest more of

their profits in their people, as prime resources, who in turn help the firm tosustain its sources of competitive advantage.

However, the results of the one-way analysis of variance of the meanresponses of those firms who invest above average resources in branding andcorporate reputation management and those who invest below averageamounts suggest that the relationships between branding, personnelstrengths and performance may be more complex than the results of thecorrelation analysis imply.

Table 3. Correlations Between Branding Investment & Firm Characteristics

PERF MO BRAND NSD WEB DIFFER COST SKILL TRAINPerformance 1.000

Marketorientation

0.385* 1.000

Brandinginvestment

0.473* 0.572* 1.000

New servicedevelopment

0.361* 0.518* 0.417* 1.000

Webmarketing

0.069 0.107 0.192* 0.127 1.000

Different-iation

0.439* 0.212* 0.206* 0.284* 0.033 1.000

Cost-effectiveness

0.397* 0.209* 0.175* 0.197* -0.087 0.260* 1.000

Skill levels 0.546* 0.257* 0.236* 0.251* 0.066 0.453* 0.339* 1.000

Training

investment

0.531* 0.263* 0.404* 0.319* 0.142 0.270* 0.206* 0.325* 1.000

* Pearson correlations are significant at the 99% confidence level.


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The brand orientation of firms was assessed by investigating whether theyinvested significantly in branding and corporate reputation activities. Five-point Likert-type scales (from 1 = strongly disagree to 5 = strongly agree)were used to measure respondents’ relative levels of investment. Exploratoryfactor analysis indicated that the five items that were measured (see the list

of items in Table 4) tended to factor together into a single variable accountingfor 59% of the variance explained, suggesting a reasonable degree ofconvergent validity. The Cronbach’s alpha score of 0.83 also indicates areasonably high level of internal reliability. The sample was then split intoabove and below average investors (roughly 50/50) and ANOVA used tocompare the characteristics of each group (see Table 4).

The top branders exhibited significantly greater investment in all aspectsof brand and corporate reputation management, and also invested more inpersonnel skills development, offering further support for Propositions 1 and3. However, there was no significant difference in the service skills levels ofbelow and above average brand managers, meaning that Proposition 4 was

not supported by this analysis (and was counter to the support for thisproposition implied in the correlation analysis). There may be three reasonsfor this. First, the correlation analysis could indicate that requisite skillslevels are a prerequisite for survival, and therefore this variable may not be agood discriminator between firms that invest above or below averageamounts in branding and corporate reputation. Second, the cross-sectionalnature of this phase of the research may not take into account any time lagsbetween investment in training and evidence of superior skills levels. Third,the situation may be more complex than the quantitative analysis implies,which suggests that the links between branding, human resources andperformance need to be explored in greater depth in qualitative analysis.

A breakdown of the performance dimensions (see Table 4) offers onlypartial support for Proposition 2 and shows that the higher overallperformance (compared to the nearest competitor) associated with firms thatinvest more in branding and corporate reputation is due mainly to superiorbranding performance (brand awareness and equity, and corporatereputation), which is understandable given the extra investment in this area.Again, the cross-sectional nature of the research may mask lags betweeninvestment in branding and subsequent improvements in customerperformance (awareness and loyalty) and financial performance (totalrevenue, profitability and profitability growth over the previous three years).The lack of significant positional advantages (cost effectiveness and/ordifferentiation) in the marketplace would appear to lend weight to thisargument.


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Table 4. Characteristics of Top Branders

Significantdifference?(99% level)

Mean scores forbelow averagebranders(1 low, 5 high)

Mean scores forabove averagebranders(1 low, 5 high)

Brand Management (alpha =0.83)We invest significantly in …

yes 2.21 3.61

Managing and promoting ourservice brand(s)

yes 2.58 4.08

Managing and promoting thereputation / image of our firm

yes 2.93 4.21

Customer loyalty programs yes 1.85 3.29Research into internal perceptionsof brands (frontline staff, coreservice providers, management)

yes 1.80 2.97

Research into external perceptionsof brands (customers,

intermediaries, suppliers)

yes 1.92 3.48

Resources & Skills

Service skills levels compared tonearest competitor

no 3.74 3.93

Investment in personnel skillsdevelopment

yes 2.98 3.55

Number of employees no 174 347

Market Orientation (alpha =0.88) yes 3.21 3.73Customer orientation (0.72) yes 3.74 4.23Competitor orientation (0.75) yes 2.86 3.60

Interfunctional co-ordination (0.78) yes 3.21 3.69Responsiveness (single item) yes 3.32 3.63Profit emphasis (0.78) yes 2.84 3.43

Innovation Management(alpha=0.90)

yes 2.98 3.31

Organisation yes 3.40 3.76Synergy no 3.16 3.41Process yes 2.28 2.70Team Level no 3.07 3.36

Information Technology(alpha=0.78)

no 3.64 3.94

E-mail is important to business no 4.01 4.28Intranet is important to business no 3.12 3.43Extranet is important to business no 2.94 3.37

Cont’d…


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Significantdifference?(99% level)

Mean scores forbelow averagebranders(1 low, 5 high)

Mean scores forabove averagebranders(1 low, 5 high)

E-commerce increasinglyimportant to business

no 3.95 4.23

Overall Performance(alpha=0.79)

yes 3.29 3.66

Financial Performance (0.68) no 3.32 3.56Total revenue no 3.07 3.33Profitability no 3.43 3.66Profitability change last 3 years no 3.39 3.67Customer Performance (0.74) no 3.67 3.79Customer satisfaction no 3.65 3.82Customer loyalty no 3.68 3.78Brand Performance (0.81) yes 3.12 3.74

Brand equity yes 3.04 3.63Brand awareness yes 3.06 3.68Corporate reputation yes 3.47 3.91

Positional Advantages

Differentiation no 3.58 3.73Cost-effectiveness no 3.47 3.61

Market Characteristics

Competitive intensity (0.71) yes 3.11 3.64Market turbulence (0.66) no 3.08 3.28Technological turbulence (0.78) no 3.66 3.86

Market growth no 2.86 3.00Market-entry barriers no 2.77 2.72Supplier bargaining power no 2.58 2.77Buyer bargaining power no 3.57 3.73

The findings, therefore, offer partial support for previous studies whichindicate that training and communication are needed so that both employeesand customers know what the brand stands for (e.g. de Chernatony andDall’Olmo Riley 1999). However, there is less evidence that staff in topbranding firms have actually internalized the brand (Berry 2000) or that theseorganisations have developed a consumer delighting culture that can helpfacilitate the brand experiences, perceptions and relationships that customersmay have with the firm (de Chernatony and Dall’Olmo Riley 1999).

In fact, all firms in the sample (i.e. both above and below average groups)invest significantly less in researching internal brand perceptions (i.e. the


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views of frontline staff, core service providers and management) thanresearching the perceptions of external stakeholders such as customers,intermediaries and suppliers. It may be that branding efforts are driven moreby the actions of competitors, rather than the need to match the needs ofcustomers with the capabilities of staff, given that those who invest more in

branding and corporate reputation appear to operate in significantly morecompetitive markets than firms that invest less in branding

Regardless of the strategic drivers, there is some indication that corporatereputation and corporate branding practices may be closely linked, asBickerton (2000) posited. However, the way these are linked and the waysthat complementary branding and corporate reputation practices areoperationalised in the context of service firms can only be assessed throughanalyzing the interviews that make up the second phase of this study.

Interview Methodology

The top 50 firms from the initial survey were identified, based on their self-assessed performance scores for brand awareness, brand equity, customersatisfaction and loyalty, sales, profitability and profit growth compared totheir nearest competitor. Previous analysis had shown these performanceareas were closely interrelated. A smaller group of 20 less well-performingfirms was selected to contrast their marketing and management practiceswith the best practices adopted by the top performers.

Of the firms selected, 27 top performers (54% of the firms approached)and 10 lower performers (50%) agreed to take part. Where possible, multipleinterviews were held in the larger organisations, to insure a consistentmanagerial view, while single interviews were held in the smaller andmedium-sized firms (often with the owner or managing partner in smallerenterprises). A total of 44 interviews, between 1 and 2 hours in length, wereconducted by teams of 2 interviewers using a semi-structured format. Allinterviews were taped and transcribed, and one of the two interviewers alsotook notes to verify the transcriptions.

Group training sessions were conducted for all interviewers and coders.Although the protocol required teams of two researchers to conduct theinterviews, an attempt was made to involve the lead researcher in 80% of allthe interviews to ensure consistency. The interview tapes wereindependently transcribed and each interview analysed initially by twocoders to establish initial classification categories for the responses. To ensureinter-coder reliability, each pair of classification categories was compared

and any differences resolved through discussions between the coders and thelead researcher to ensure there was at least a 90% agreement. The leadresearcher then analysed the categorised data further and synthesised the


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responses into aggregated tables of indicative responses (with a record of thenumber of interviewees who responded in a similar way). Thesecategorisations reflected commonalities and differences between managers’views (both within and between the better performing and less wellperforming groups of firms). These aggregate interview data tables, which

reflect the major themes that emerged from the interviews, form the basis ofthe discussion of best practices in services branding in the second part of thisarticle.

In each interview, respondents were first asked open-ended questions todescribe their firms, to offer their unprompted (top of mind) views on whatmade their firms successful and what they considered to be their mainsources of competitive advantage. This was followed by a more structuredphase, where managers were asked to comment on a “report card” of howwell they performed in various areas compared to other firms in theirparticular sector, based on their answers to the initial survey. Managers wereasked to elaborate on examples of marketing and management practice

related to the generic sources of competitive advantage identified by thesurvey. They were also asked to elaborate on areas they may have raised inthe opening questions, but which were not covered in the survey. Allinterviews followed the same protocol.

Interview Sample

Table 5 summarises the demographics of those who took part in theinterviews. The sample covers a wide range of firm sizes and serviceindustry sectors. Larger firms (49%) tend to be over-represented, though. Themain focus of this study is on professional firms, the financial services sectorand other firms providing business services, rather than those providingpersonal services (e.g. hairdressers, gymnasiums, primary health services,etc), or hospitality or tourist services. However, feedback from thoseattending the “technology transfer” workshops that followed the two initialphases of the study suggests that the results are also applicable to these othersectors, as well as the public and not-for-profit service sectors.

The largest groups of interviewees were functional managers in sales ormarketing (43%); followed by those with “board” level authority and titlessuch as owner, managing director or principal partner (27%); and seniorbusiness managers with titles such as CEO, general manager or practicemanager (16%).


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Table 5. Summary of Interview Participants

Demographics Number (%)Top performing companies (in terms of relative financial, customer& branding performance compared to nearest competitor)

Below average performers

Main market: Banking, finance, insuranceAccountancy, lawTransportWholesale, retail, importing, distribution servicesCommunications, mediaAdvertising, marketing, management consultingEngineering, building, architecture, trade servicesDesign, innovationBusiness support servicesAgricultural consultants, agricultural services

IT training

Firm size: Large (over 200 staff)Medium (50 – 200 staff)Small (1 – 49 staff)

Job titles: Owner, Managing Director, Principal PartnerCEO, General Manager, Practice ManagerMarketing, Sales, Account ManagerPersonnel ManagerAccountant, new business manager

27 (73%)

10 (27%)

5 (13.5%)3 (8%)4 (11%)5 (13.5%)5 (13.5%)3 (8%)6 (16%)1 (2.5%)1 (2.5%)3 (8%)

1 (2.5%)

18 (49%)9 (24%)10 (27%)

12 (27%)7 (16%)19 (43%)3 (7%)3 (7%)

NB - A total of 44 people were interviewed in 37 organisations.

Results of Interviews

Unprompted Perceptions of Sources of AdvantageAt the start of each interview, managers were asked, unprompted, to

describe their firms’ major sources of competitive advantage (see Table 6).These top-of-mind responses suggest that managers perceive branding(mentioned by managers in 44% of the top performing firms whereinterviews were conducted) and staff motivation, skills and competencies(mentioned by 44% of top-performers and 10% of lower performers) to be thetwo major sources of advantage. The next most important source of

advantage was having a strong organisational culture with a clear vision,mission, values, energy and passion to guide staff behaviour (33%; 10%).Other important sources of advantage were utilising information technologyto improve marketing and business performance (30%; 10%), and two factors


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Table 6. Managers’ Perceptions of Sources of Competitive Advantage

Unprompted views of most important sources ofadvantage for service firms

% of topfirms(N=27)

% of lowerfirms(N=10)

Strong brands

Corporate image, reputation, social responsibility, publicservice

Product/service quality

Staff motivation, skills, competencies

Vision, mission, values, energy, passion

Market orientation - responding to customers’ needs &competitors’ actions

Managing customer relationships, key client accountmanagement

Distribution channel relationships

Innovation culture

Continuous innovation

Willingness to experiment, take risks & make mistakes

Utilising information technology

Partnerships and alliances

Little hierarchy, flat structure

Community ownership

Market (segment) coverage

Geographic spread, location

Internationalisation

Size, critical mass, market share, growth

44%

11%

30%

44%

33%

15%

30%

11%

22%

15%

15%

30%

26%

15%

11%

30%

26%

11%

15%

0%

10%

10%

10%

10%

0%

70%

0%

0%

0%

0%

10%

0%

10%

0%

0%

0%

0%

0%

NB - Percentages relate to the number of firms whose managers hold these views,rather than the percentage of managers interviewed


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related to market scope: covering a broad number of market segments (30%;0%) and a wide geographic area (26%; 0%). Utilising partnerships andalliances to leverage sources of advantage (26%; 0%) and having a culturewhich encouraged innovation (22%; 0%) were also important.

Although managers in 30% of the top-performing firms mentioned

managing customer relationships and key client account management asimportant sources of competitive advantage, 70% of lower performers alsomentioned this. It would appear that good customer relationships arenecessary for survival, rather than superior performance. In line with themarket orientation concept (Narver and Slater 1990, Jaworski and Kohli1993), managers need to understand not only what their customers want, butalso what choices their competitors are offering.

Managers’ unprompted perceptions of major sources of advantage can begrouped into a number of interrelated business practices. The best practicesin branding, corporate reputation/image and quality management aresummarised in Table 7. The relevant responses by interviewees to illustrate

these practices are detailed in Appendix 1.Brand strength appears to be linked to several key practices (see Table 7).These include:

• Investing in marketing communications to improve customerawareness and understanding of corporate and product brand values(e.g. “We’ve put on a set of clothing in the form of the brand. And wemanage to extract a price premium of at least 30% and sometimes 50% ormore in the markets around the world. So it’s the way we position that andthe way we support it with in-market structures. We have very competentsupport from our promotional program, globally, unlike our competitors”).

• Contributing to the wider community to improve corporatereputation or image (e.g. “We tend to hold celebrations [for our widercommunity]; we’re just helping to fund these people because most of themare community organisations, volunteer organisations; they are the heroes ofit”).

• Improving internal communications (internal marketing) so front-lineand professional staff are kept better informed about customer needs,market changes and company initiatives, thereby enabling staff tohelp customers better (e.g. “Staff didn’t feel empowered to talk for theorganisation, so we focused on communications, including a video programme regularly produced and sent out to staff, and a corporateintranet. We had spent a lot of money investing in technology for the

customers, but it didn’t provide the staff a lot of value, so the corporateintranet [now] allows people to keep up to date with what’s going on”).


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736 Brendan J. Gray

• Improving service quality (e.g. “Our philosophy is to provide betterservices than anyone else. From a variety of perspectives − service quality,management systems − we’re perceived as one of the industry leaders. Andthat is a result of setting exceedingly high standards right from day one anddeveloping on them”).

Table 7. Branding and Service Quality Practices [unprompted responses]

Sources of advantage Best practices

Branding, positioning,corporate reputation

Strong brands (mentioned by 44% of the 27 top-performingfirms; but no lower performing firms)

Positioning based on service quality, value, trust (15%; 10%) Positioning based on attractive shopping environment (4%;0%)

Emphasis on corporate image/reputation, public service(11%; 10%)

Improving internal communication (7%; 0%)

Word of mouth (7%; 20%)

History, longevity (7%; 0%)

Personal networking, selling (7%; 10%)

Political lobbying (4%; 0%)

Loyalty programs (15%; 10%)

Quality management Improving service quality (30%; 10%)

Benchmarking (7%; 0%)

Prompted Perceptions of Sources of AdvantageFollowing the unprompted discussion, managers were then asked to

comment on a report card that summarised their performance on a numberof dimensions compared to their nearest competitor (based on the results ofthe earlier survey they had participated in). This part of the interviewsincluded prompted questions about firms’ investment in branding andcorporate reputation.

The results suggest that top performers are more likely to invest in


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branding their organisations and service products than lower performers.They also tend to be more sophisticated in their approach (see Table 8 for asummary of best practices and Appendix 2 for detailed comments). Whenprompted to elaborate on their branding activities, top performersemphasised the following practices:

• Developing strong, competitive branding positions by integrating thevarious marketing communication tools to improve communicationefficiency and effectiveness (e.g. “We spend a lot on brand awarenesswith advertising, sponsoring sports programs on TV, billboards, a web site,celebrity golf matches with clients, charity donations and sponsorships,writing a book on financial planning”).

• Branding people rather than products, where possible, to personalisethe organisation (e.g. “Our campaign last year involved staff fronting adsand interacting with real customers. The advertising process involved trustand commitment from senior management, as well as staff, because we didn’t

know what staff or customers would say in the ads−

there was no script tobe fine-tuned”).

• Using internal marketing to encourage staff buy into the corporatevision, understand market changes and new service and/ormarketing initiatives, and improve customer relations (e.g. “Our wholeorganisation structure is extremely flat, with about 65% of our total staffdealing with customers. And our internal support staff fully understand thatour internal customers are just as important, and their primary role ismeeting the needs of the front line staff who are meeting the needs ofcustomers”).

• Careful use of umbrella (corporate) branding, where appropriate, toinsure consistency in quality and positioning over a range of serviceproducts, and even divisions in larger organisations (e.g. “Ourcorporate umbrella brand gives a lot of credibility to new products andservices”).

• Linking corporate or product brands with sponsorships and othercommunity support activities (e.g. “There are a number of promotionalevents that we started which relate [to our major sponsorship] − a mix ofthings like prizes in scholarship and an annual lecture where we bring aninternational speaker and have a public speaking event − which generate acertain amount of news [publicity]. One of the branding outputs is to look atour sponsorship and see what we’re doing and how we can leverage itmore”).

•

Investing in formal market research to track perceptions of corporateand product brand values and market positioning relative tocompetitors’ brands (e.g. “We research our brand continuously, and quiteheavily, on a month-by-month basis, in terms of advertising brand points.


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738 Brendan J. Gray

Brand performance is one of the key KPI’s that the bank measures itself on.We measure the ability of customers to recognise our brand and variousattributes which measure ad performance versus competitors focused roundthree areas − community, service and technology. And we measure the“stickiness” of our brand and other brands − attraction and retention”).

Table 8. Services Branding Practices [prompted responses]

Sources of advantage Best practices

Brand investment,positioning andintegration

Investing in brand equity (mentioned by 48% of topperformers and 30% of lower performing firms; however,30% of lower performers also made little or no investment inbranding)

Competitive brand positioning (19%; 0%)

Corporate/umbrella branding (11%; 0%)

Integrated marketing communications (15%; 0%)

People focus Branding people in the organisation, rather than servicesoffered (22%; 10%)

Internal marketing (15%; 0%)

Community relations Associating brand with community events (7%; 0%)

Sponsorship, PR and other below the line promotions (7%;0%)

Customer relations Personal selling, account management, relationshipmanagement (11%; 50%)

Loyalty programs (11%; 10%)

Customer newsletters (11%; 20%)

Encouraging positive word of mouth (7%; 50%)

Quality Product/service quality as implicit promotion (19%; 20%)

Feedback Brand auditing, research (19%; 0%)

Lower performers and top performers both make some use of loyaltyprograms and customer newsletters to encourage repeat purchases and to


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publicise people, products and community support. They also rely to someextent on service quality as an implicit form of promotion, realising that theyneed to deliver on promises if they are to retain credibility and customersupport.

Lower performing firms are also more likely to rely on personal selling,

key account management and relationship management as ways ofpromoting their brands, again reflecting a lower investment in more formal“above the line” communication methods. As the poorer performersinterviewed tended to be smaller, with limited financial and personnelresources, this could also explain their lower investment in advertising andmarket research, and may help explain their greater concern with short-termprofits.

Both lower and higher performers attempt to manage their corporateimages or reputations, and appreciate that a good reputation improvesperceptions of honesty, trustworthiness and service quality (see Table 9 for asummary of best practices and Appendix 3 for detailed comments). This is

important, given the intangible nature of services and the difficulties thatprospective, new or existing customers may have in assessing service quality.Reputation comes from providing excellent service, being a good and safeemployer, and being seen to support the organisation’s wider community.All these activities are likely to improve positive word-of-mouth.

There are obvious overlaps between corporate branding and corporateimage or reputation practices. For many firms, branding practices appear tobe primarily concerned with improving perceived customer value, whilecorporate image/reputation practices appear to be more concerned withimproving the perceived value that service organisations provide to otherstakeholders, including the wider community. However, things get murkywhen firms link sponsorships with their corporate or service brands (e.g.“Both of them [corporate reputation and branding] are essential. Reputation is verymuch about how we interact with our customers. And sponsorship is not so muchabout trying to demonstrate you’re a good corporate citizen and hope to improveawareness − it’s about augmenting the concept of trusted expert to our target groups. We track how people perceive our sponsorships in light of: “Does it make me feel that [company] is the trusted expert for me in financial services?” That manifestsdifferently for different customer segments”).

Sponsorship and other forms of community relations were mentioned inthe contexts of both branding and image/reputation management, whichadds to the confusion. Further, better performers were more likely to linkcorporate reputation and branding activities (e.g. “Corporate identity and brand

image go hand in hand; you need to be a fair employer, reliable, and address health,hygiene and safety areas. At the consumer level, the brand of the store is moreimportant [than the parent company]. The latter [parent company] is better knownto suppliers”).


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740 Brendan J. Gray

While some top-performing firms appeared to be more altruistic, theywere still wary of anything that might conflict with their corporate and/orbrand values (e.g. “We want to see our staff more involved in the community. Weneed to find a vehicle to do that [since pulling out of major sport sponsorship becauseof a conflict with brand positioning] – it’s a new challenge”). However, the major

differences between better and less well-performing firms appears to berelated more to the latter’s lack of resources and expertise to proactively andstrategically manage corporate image and reputation, rather than a lack ofsocial conscience. Even some better performers lacked the resources tosupport sponsorships with the additional advertising and PR investment thatis often necessary to create awareness and to leverage stakeholder support(e.g. “Sponsorship [of major events, organisations, appeals] is always one of thesethings where, unless you’re prepared to commit the same amount of money again insupporting the sponsorship [with advertising & PR] then you might as well not doit. And we’ve never had the financial resources to do that, so we’ve tended to steeraway, unless there were some very clear advantages to us”).

Top performers were more likely to ensure a good fit between communitysupport activities and desired brand image (e.g. “We try to leverage the brandthrough sponsorship; it’s nice to be able to support one charity nation-wide whichdoes a lot for needy children; we offer scholarships for underprivileged children in Auckland; supporting children and families fits in well with our customers”), andwere slightly more likely to participate in professional organisations andindustry awards to improve their reputation among their peers.

It is worth noting that, before this study was undertaken, the relationshipbetween corporate branding and corporate reputation had not beenadequately researched in the either the goods or service firm contexts. Manyof the managers interviewed in this study appeared to use the termsinterchangeably and/or argued that they were inexorably linked, supportingBickerton’s (2000) argument about the close relationship between these twoconcepts. Bickerton also posited that the corporate brand incorporatesreputation, as well as product/service performance, the portfolios ofproducts offered and customers served, and the organisation’s networks.However, the results of this study suggest that corporate reputation may bethe over-arching concept that incorporates both corporate and servicebrands, meaning that corporate reputation is the yard stick by whichcustomer value creation practices, as well as activities aimed at creatingvalue for other internal and external stakeholders, are measured.

This appears to be because the generic features of business, financial andprofessional services, particularly their intangibility and heterogeneity

(Lovelock 1983), as well as their complexity, make it difficult for customers toassess service quality, and so they must rely, in part, on surrogate cues suchas the overall impressions created by corporate reputation, to make


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judgments about the quality, honesty and trustworthiness of the firms theychoose to deal with.

Table 9. Corporate Image/Reputation Practices [prompted responses]

Sources of advantage Best practicesProactive strategies Managing corporate identity & image (mentioned by 26% of

top performers; 20% of lower performers)

Supporting branding activities (22%; 0%)

Involvement in professional organisations (7%; 0%)

Participating in industry awards (7%; 0%)

Promoting public image of CEO, principal (7%; 10%)

Promoting public image of managers, staff (4%; 10%)

Community relations Involvement in community events (26%; 0%)

Sponsorship (41%; 20%)

Conclusions

Several conclusions can be drawn from this research. The survey resultssuggest that the research model (see Figure 1) appears to capture many of theimportant drivers of sustainable competitive advantage in service firms,particularly the importance of greater investment in service branding and

corporate image/reputation management.Four propositions related to the model were tested in the quantitative

phase of the study:

P1: More highly market-oriented service firms are likely to invest more resourcesin branding than less market-oriented firms.

P2: Service firms that invest more resources in branding (i.e. brand-oriented firms) are likely to outperform those that invest fewer resources in brandingover a wide range of performance measures.

P3: Brand-oriented service firms are likely to invest more resources in personnel

skills training.

P4: Brand-oriented service firms are likely to have higher customer skills levels.


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742 Brendan J. Gray

The results of the correlation analysis (Table 3) and one-way analysis ofvariance (Table 4) supported the first proposition indicating, in line with theresource based theory of the firm (Wernerfelt 1984; Barney 1991; Fahy &Smithee 1999) and theories of customer-based brand equity (Aaker 1992a,1992b and 1996; Keller 1993), that brands are indeed valuable assets of

service firms. The expected consequence of this investment−

that thebranding practices of market-oriented firms, because of their superiorcustomer and competitor knowledge and strategies (Narver and Slater 1990; Jaworski and Kohli 1993), would lead to positional advantages that wouldresult in a wide variety of performance benefits − was only partiallysupported (i.e. by the correlation analysis but not the analysis of variance).This may have been because of the cross-sectional nature of the study andtime lags between investment in branding and expected customer andfinancial performance benefits. The analysis of variance did indicate,however, the superior brand awareness, brand equity and corporatereputation of firms who invest more in branding, which suggests these

outcomes may be important lead indicators of future marketing and financialperformance.The sources-position-performance theory posits that competitiveness is

only sustainable if firms reinvest in their sources of advantage (Day andWensley 1988). Although the correlation analysis (Table 3) offered somesupport for Propositions 3 and 4, the one-way analysis of variance (Table 4)only supported Proposition 3. However, the mixed findings – that despitegreater reinvestment in skills training, top branders did not havesignificantly higher service skills than below average branders – could havebeen related to the same cross-sectional research limitations and the maskedlead and lag effects related to Proposition 2 (i.e. it takes time for investmentin training to be manifested in superior skills).

The results of the quantitative analysis suggested that relationshipsbetween investment in branding and corporate reputation and the skills thatservice personnel need to “live the brand” (de Chernatony and Dall’OlmoRiley 1999, p181) in order to improve customer and firm performance arecomplex, suggesting a need for in-depth qualitative analysis. This led to thesecond phase of the study, and an important research question that neededto be addressed:

Q1: What practices do top-performing service firms use to manage their brandsand/or corporate reputations?

The results of the unprompted (top of mind) part of the interviews suggestthat having strong brands and skilled and motivated staff are the two most


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important sources of competitive advantage. Brand strength, in turn, islinked to four main practices: investing in marketing communications toimprove customer awareness and understanding of corporate and productbrand values; contributing to the wider community to improve corporatereputation or image; improving internal communications (internal

marketing) so front-line and professional staff are kept better informed aboutcustomer needs, market changes and company initiatives, thereby enablingstaff to help customers better; and improving service quality to improvemarket positioning.

The results of the prompted part of the interviews suggest that the mostsuccessful branding practices relate to: developing strong, competitivebranding positions by integrating the various marketing communicationtools to improve communication efficiency and effectiveness; brandingpeople rather than products, where possible, to personalise the organisation;using internal marketing to encourage staff buy into the corporate vision,understand market changes and new service and/or marketing initiatives,

and improve customer relations; careful use of umbrella (corporate)branding, where appropriate, to insure consistency in quality andpositioning over a range of service products, and even divisions in largerorganisations; linking corporate or product brands with sponsorships andother community support activities; and investing in formal market researchto track perceptions of corporate and product brand values and marketpositioning relative to competitors’ brands.

Taken together, these insights provide an initial step towards answeringthe call to develop a tailored theory of services branding (McDonald, deChernatony and Harris 2001). The results suggest there three key ingredientsof successful services branding. The first requirement is integration. This goesbeyond the integration of traditional marketing communication tools (e.g.advertising and PR) to the integration of communication and serviceinnovation and delivery strategies, and the integration and harmonization ofcommunication strategies aimed at different stakeholder groups, includingcustomers, staff, professional peers and the wider community. Becausecommunication should be a two-way process, this means that on-goingmarket research is essential to ensure quick response to changing customerneeds and perceptions of service quality and satisfaction and to gainoptimum market positioning for both the firm and is service products.

The second requirement of successful services branding is investment in people. This includes internal marketing and personalization of the brand tohelp overcome the inherent problems of intangibility and complexity,particularly in the case of professional and business services, as well asinvestment in skills training. Together these practices also help to improveperceptions of service quality and satisfaction, as well as improved


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744 Brendan J. Gray

interpersonal relations with a variety of stakeholders, which areacknowledged aspects of successful service brands (Dall’Olmo Riley and deChernatony 2000; McDonald and de Chernatony 2001).

The third requirement is to develop a respected corporate reputation. Someresearchers have argued that corporate (umbrella) branding, rather than the

promotion of individual product brands, is more appropriate for servicefirms, particularly those providing professional and business services.Posited benefits include: enhanced perceptions of the capabilities,trustworthiness and differentiation of the provider (Dall’Olmo Riley and deChernatony 2000; McDonald and de Chernatony 2001); public awareness,favourable positioning, assisting in crisis management, and attraction andretention of good employees (Gregory and Wiechmann 1998); andencouraging sales (Gregory and Wiechmann 1998; Yoon, Guffey andKijewski 1993). However, insights gained from the corporate image andreputation practices of top performing service providers who participated inthis study suggest that corporate reputation management may be the over-

arching concept that incorporates both corporate and service brandingstrategies and practices. This means that a positive corporate reputationprovides the yard stick by which customer value creation practices, as well asactivities aimed at creating value for other internal and external stakeholders,are measured.

The results suggest that reputation comes from providing excellentservice, being a good and safe employer, and being seen to support theorganisation’s wider community. All these activities are likely to improvepositive word-of-mouth. This means that reputation springs from providingsuperior value to customers as well as other stakeholders, including staff andthe wider community. Sponsorship and other forms of community relationswere mentioned in the contexts of both branding and image/reputationmanagement. Further, better performers were more likely to link corporatereputation and service branding activities and were wary of any corporatereputation activities, such as sponsorships, that might conflict with theircorporate and/or brand values. Managers also tended to use the termscorporate identity, image, reputation and branding interchangeably and/orargued that they were inexorably linked, supporting Bickerton’s (2000)argument about the close relationship between these concepts. Thisreinforces the conclusions that managers of top-performing service firmsconsider customer perceptions to be central to the development of corporatereputation, and that corporate and service product branding strategiesshould contribute to over-arching reputation objectives.


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Implications

The results of this study have important implications for both servicemanagers and marketing researchers. The findings suggest that successfulNew Zealand professional and business firms have developed reputation

and branding strategies and practices that help improve customers’ levels ofawareness and perceptions of the trustworthiness of the organisation and itspersonnel, and heighten perceptions of the quality of its offerings. The resultssupport the findings of previous research by authors such as Gregory andWiechmann (1998) that corporate advertising can be used to build publicawareness and a favourable market position, and also support Bickerton’s(2000) proposition that corporate reputation and corporate branding areclosely linked.

The survey results suggest that added value can accrue from corporatereputation and corporate and service product branding activities (e.g. greaterbrand equity relative to competitors), while the interview results emphasise

the need to improve communications and relationships with customers, staffand the wider community to improve organizational performance.The study answers calls for the development of an integrated theory of

services branding (McDonald, de Chernatony and Harris 2001) andconcludes that the essential components are the integration ofcommunication, service innovation and delivery, and personnel managementstrategies and practices, the importance of investment in people and the needfor service branding strategies and practices to be guided by over-archingcorporate reputation objectives.

Further research is needed in other country-markets to investigatewhether the best practices of top-performing New Zealand service providerscan be generalized to other firm and market contexts. Despite the insightsgained from this study, the relationship between corporate branding andreputation requires further clarification, and is an area worthy of futureresearch.

Future research should also investigate whether there are majordifferences in branding approaches between service firms and those involvedin primary and secondary (i.e. manufacturing) industries. The starting pointhere would not be how traditional product branding strategies can beadapted for services, but instead what lessons goods manufacturers can learnfrom successful service branders.

Finally, there is also a need for more research on customers’ perceptions ofvalue (Ponsonby 2001) to determine what value service reputation and

branding activities provide and whether positive perceptions improve theservice experience. This would be in line with Bickerton’s (2000) contentionthat the starting point for corporate branding (and by extension, corporate


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746 Brendan J. Gray

reputation) should be customer value (a bottom-up strategic marketingapproach), although this also needs to be guided by an appropriate visionand strategy (a top-down approach). This paper has adopted the latterperspective. However, the former area urgently requires further research iffirms are to improve the service experiences they offer consumers and to gain

insights into how to position their firms and their service offerings moreeffectively.

References

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Aaker, David A. (1992b), “Managing the Most Important Asset: BrandEquity”, Planning Review, Vol. 20 No. 5, pp.56-58

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Balmer, 1995, “Corporate Branding and Connoisseurship”, Journal of General Management; Volume 21, Issue 1; pp. 24-45

Barney, Jay. (1991), “Firm Resources and Sustained Competitive Advantage”, Journal of Management, Vol.17 No.1, pp. 99-120

Bharadwaj, Sundar G., Varadarajan, P.R and Fahy, John (1993), “Sustainablecompetitive advantage in service industries: a conceptual model andresearch propositions”, Journal of Marketing, 57 , October, pp. 83-99

Bickerton, D. (2000), “Corporate reputation versus corporate branding: therealist debate”, Corporate Communications: An International Journal, Vol. 5 No. 1.

Cornelissen, J. “Corporate image: an audience centred model”, CorporateCommunications: An International Journal, Vol. 5 No. 2

Day, George S. and Wensley, Robin (1988), “Assessing advantage: a framework for diagnosing competitive superiority”, Journal of Marketing,Vol. 52 July, pp. 1-20

de Brentani, Ulrike (1991), “Success Factors in Developing New BusinessServices”, European Journal of Marketing, Vol. 25 No. 2, pp. 33–59

de Brentani, Ulrike (1995), “New Industrial Service Development: Scenariosfor Success and Failure”, Journal of Business Research, Vol. 32 No. 2, pp.93–103


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Eriksson, Kent, Majkgard, Aanders and Sharma, D.Deo (1999), “Servicequality by relationships in the international market”, Journal of Services Marketing, Vol.13 No. 4/5, pp. 361-375

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Gray, Brendan J., Matear, Sheelagh M., Boshoff, Christo and Matheson,Philip K. (1998), “Developing a better measure of market orientation”,European Journal of Marketing, Vol. 32, No. 9, pp. 884-903

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Gregory, J.R. and Wiechmann, J.G. (1998), Marketing Corporate Image: TheCompany as Your Number One Product (2nd edition), Chicago: NTC Business

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Appendices

Appendix 1. Branding and Service Quality Advantages [unprompted responses]

Branding,reputation

Illustrative Statements

Strong brands(mentionedby 44% of the27 top-performingfirms; but nolowerperformingfirms)

We’ve put on a set of clothing in the form of the brand. And wemanage to extract a price premium of at least 30% and sometimes50% or more in the markets around the world. So it’s the way weposition that and the way we support it with in-market structures.We have very competent support from our promotional programme,globally, unlike our competitors.

Our advertising agent and marketing people coined the phrase anddeveloped the icon, and that’s the genesis for the whole marketingphilosophy for the company, the whole service attitude of thecompany.

The first mover brand stands for reliability, keeping promises; peopleare the brand.

We have high brand recognition – stable, strong, heavy R & Dinvestment, a broad range of very strong products.

The credibility of our brand affects performance.

Positioningbased onservicequality,value, trust

(15%; 10%)

From a strategic positioning point of view, we measure three keythings: community, service and technology. These three areas canimpact the most on customer relationships as well.

We became involved in benchmarking exercises so that we can get

feedback to ensure that we provide very competitive, cost-effectivedollar services compared to other international schemes andprogrammes, and to review them accordingly.

Research tells us we are seen as competitive, trustworthy, loyal, butalso old fashioned, a government service. Our brand is the mostpreferred brand, but also the most rejected. Because service productsare becoming more commodity-based and price-driven and there aremore companies in the market, we have to get better positioned inthe public’s minds.

Positioning

based onenvironment(4%; 0%)

We are trying to improve the “feel good” factor, to be interesting

visually, exciting; we want people to stop and browse and shop;we’re making the environment a lot more customer slash user-friendly so it becomes more of an experience as opposed to justpurely shopping in a self-help environment.


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Emphasis oncorporateimage/reputation,public service(11%; 10%)

We tend to hold celebrations [for our wider community]; we’re justhelping to fund these people because most of them are communityorganisations, volunteer organisations; they are the heroes of it.

Profits are given back to the community, which improves communitypride.

Our shareholder [the government] is not as demanding as a publicshareholder; maybe we are [partly] here to fulfill the government’ssocial obligations; we have social obligations to reinvent ourselves,otherwise half our workforce could be unemployed in 5 years.

Internalcommuni-cation(7%; 0%)

Staff didn’t feel empowered to talk for the organisation, so wefocused on communications, including a video programme regularlyproduced and sent out to staff, and a corporate intranet. We hadspent a lot of money investing in technology for the customers, but itdidn’t provide the staff a lot of value, so the corporate intranet [now]allows people to keep up to date with what’s going on.

We have frequent management meetings [to keep people betterinformed].

Word ofmouth(7%; 20%)

Our distinctive competency is what people say about us; if theyreally want to win and not get stuffed up, then employ us[company]. {strong brand, but below average relative performancebecause nearest competitors also strong}

History,longevity(7%; 0%)

We’ve been around for a long time and been consistent in ourapproach.

A large number of people have worked here for 30 or 40 years. Wenever get the high innovation score of later entrants; customers wantevolution, not revolution, from this type of business; we are a trustedthird party.

Networking,selling(7%; 10%)

We’ve got a network that stretches into all sorts of places.

We don’t advertise; we identify who they [potential clients] are and just get out and talk to them; it may take 3-4 years to get a goodclient. {lower performer}

Lobbying(4%; 0%)

We work hand in hand with politicians to help make the [financialservices] future.


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750 Brendan J. Gray

Loyaltyprograms(15%; 10%)

If you’re talking about the low end of the market, there is no suchthing as loyalty, it’s price driven, and that’s the bulk of thepassengers. However, with First and Business Class travellers, yesthere is a huge factor of loyalty. They develop, through FrequentFlyer programmes, points which generate loyalty.

The [premium store brand] card is based on discount at points ofsales. So every week there are 2 000 products that people can getadditional savings on by presenting their card. So it’s not a trueloyalty programme, but obviously the idea is that it gets the customercoming back into the store. It has a high level of penetration - 90% ofour customers have a card – accounting for over 80% of our sales.People have got into the habit of using it. There is certainly so muchmore it could offer [store] given the chance to develop it further.There are no Flyby points or other loyalty card for [discount storebrand] because customers are used to every day low prices.

[As with one of our banking and finance competitors] we’ve got this[joint venture] points/credit card, where you can spend your pointsat retail outlets, hotels, etc. We have done some research on it and thefirst thing I can tell you about loyalty programmes is that the clientdoesn’t give a toss about loyalty actually. That’s the first thing we’vedecided. The loyalty is an important thing to us. What the clientwants is rewards.

Quality Illustrative Statements

Product/servicequality

(30%; 10%)

Service standards are paramount to success; we will lose our existingclients otherwise.

We can provide better support, better staff training, and goodsafeguards for customers in that they have surety of service supportin the future.

Our philosophy is to provide better services than anyone else. From avariety of perspectives - service quality, management systems - we’reperceived as one of the industry leaders. And that is a result ofsetting exceedingly high standards right from day one anddeveloping on them.

All those quality aspects … we encapsulate in terms of the brand.

Bench-marking(7%; 0%)

We benchmark ourselves extensively, both within New Zealandwhere we have competition and internationally where we don’t. Andwhat we’re attempting to do is to use independent sources ofinformation which we update every year from 27 countries.


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Appendix 2. Branding and Service Quality Advantages [prompted responses]

Investment,positioning,integration


Investing inbrand equity(mentioned by48% of topperformers and30% of lowerperformers;however, 30% oflower performersalso made little orno investment)

Our brands are very important, and are on the balance sheet [ofparent holding company] at $600 million; brand value hasincreased, which is an indication that we’re doing something right.

The board has backed us and we have invested heavily [inbranding]; the last two years have been our best ever as a business.

We spend a lot on brand awareness with advertising, sponsoringsports programs on TV, billboards, a web site, celebrity golfmatches with clients, charity donations and sponsorships, writing abook on financial planning.

If you looked at the industry, we probably rank fourth or fifth interms of advertising spending. We rely on more innovative ways,of getting our image across, like TV programme sponsorship andassociated advertising.

We changed the organisation’s philosophy to one of havingprofessionally trained sales people, and putting a lot of emphasison brand advertising, and then developing a professional approachto the different functions throughout the organisation.

Competitivebrand

positioning(19%; 0%)

We try to reposition our competitors, as well as ourselves, byimplication, by what we’ve done and by what they are not doing.

Branding sets your presence and lets people know what sort oforganisation you are, and gets people to inquire about you and thenpurchase.Essentially we had to position the work we did and any newbranding campaign to have some sense of New Zealand-ness. It[also] had to position both [the company] and its people as trustedexperts.

Our campaigns vary in different countries. Depending on wherethe markets are, from a maturity point of view, we would alterbrand positioning. In France, for example, which is quite a

sophisticated market, we would be tugging more at the heart.Whereas in Japan people really want to know what it [the serviceproduct] delivers [compared to other competitors or substitutes].


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752 Brendan J. Gray

Corporate/umbrellabranding(11%; 0%)

Our corporate umbrella brand gives a lot of credibility to newproducts and services.

Some of the product brands would be getting as strong as thecorporate one. But in terms of [umbrella/corporate brand] we’vebeen trying to develop brand associations of organisations which

are well managed and carefully run that are in touch with the needsand requirements of customers, and that are not there to make aprofit for the sake of making a profit. And that we had a solid valueproposition, a fair price for what we charge, and do so in atransparent and competitive way. That is in direct response tomarket research.

Integratedmarketingcommuni-cations [IMC](15%; 0%)

IMC is important. We use all the skills in the marketing team to getthe best out of them. For example, the communications teamreports to me as marketing manager (in other organisations theytend to report to corporate affairs) so we produce consistent,holistic brand messages; we integrate corporate affairs with the

branding team.

People focus Illustrative Statements

Brandingpeople in theorganisation,rather thanservices offered(22%; 10%)

“We” is more important than “I” in this organisation; teams aremore important than individuals; there are no superstars; we talkabout people we work with, not work for; having fun is animportant part of business.

Our campaign last year involved staff fronting ads and interactingwith real customers. The advertising process involved trust and

commitment from senior management, as well as staff, because wedidn’t know what staff or customers would say in the ads - therewas no script to be fine-tuned.

The use of the person’s [owner-operator’s] name is important in therural sector - there is trust in a name. In rural business you aredealing personally with the cocky - it’s an important connectionwith people. People know the name and can relate to it.

Internalmarketing(15%; 0%)

Our whole organisation structure is extremely flat, with about 65%of our total staff dealing with customers. And our internal supportstaff fully understand that our internal customers are just asimportant, and their primary role is meeting the needs of the frontline staff who are meeting the needs of customers.

There is a huge sense of company pride and loyalty, whichtranslates into knowing what the image of the company is about.


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One of the things that we can pride ourselves on is that in all theyears I’ve worked in the company I can name on one hand thenumber of people who have left us and gone and worked foranother member of the industry. Having worked for the best, theattitude is how can you possibly go and work for someone else?

Communityrelations


Communityevents(7%; 0%)

We are putting our brand in front of the market at everyopportunity, especially through our involvement in communityevents.

Sponsorship,PR

(7%; 0%)

There are a number of promotional events that we started whichrelate [to our major sponsorship] − a mix of things like prizes inscholarship and an annual lecture where we bring an internationalspeaker and have a public speaking event − which generate a

certain amount of news [publicity]. One of the branding outputs isto look at our sponsorship and see what we’re doing and how wecan leverage it more.

Customerrelations


Personalselling,account &relationship

management(11%; 50%)

Our customer loyalty program is our personal relationshipprogram. We have to respect feedback from customers aboutproduct failure or poor performance and give information tosuppliers to help resolve problems.

Account management is paramount to our success and is alreadygiving us a key strategic advantage; our competitors are not a onestop shop; we are the only people who can provide a total solution,providing a broad mix of products and services and businesssolutions under one umbrella.

Loyaltyprograms(11%; 10%)

It’s just day-to-day communication with [customers], and makingsure that they’re happy and we’re doing what they want.

We get customers to send people in to be trained [on ourequipment]; we answer the phone bright and chirpy, so the

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